Chapter 9 – Marketing Segmentation, Targeting, and Positioning

group of people with sufficient purchasing power, authority, and willingness to buy
target market
group of people a firm believe it is most likely to buy its good and services
consumer products
products bought by ultimate consumers for personal use
business products
goods and services purchased for use either directly or indirectly in production of other goods or for resale
marketing segmentation
division of total market into smaller HOMOGENOUS sections
criteria for effective segmentation
– measurable purchasing power and size
– effectively promote and serve market segment
– offer good profit potential
segmenting consumer markets
– geographic
– demographic
– psychographic
– product related
geographic segmentation
– division of an overall market into homogenous groups based on location
– marketers look at: economic variables, geographical indicators, migrations patterns
core regions
those from which 40-80% of sales are drawn from
demographic segmentation
– division of an overall market into homogenous groups based on:
1. gender and age
2. income and occcuptation
3. education
4. sexual orientation
5. household size
6. stage in family life cycle
lines are blurring recently
– blurred
– school aged children have significant influence over family purchases
tweens and teens
influence billions of dollars of family purchases
generation x
born b/w 1969-1979
– family oriented, well educated, and optimistic
– tv is important marketing tool
– support certain causes
baby boomers
born b/w 1946-1964
– high numbers and income
– lucrative segment for marketers
– high discretionary income
– high rates of home ownership
– indulge in luxury, spend conservatively though.
– dont always try new products.
cohort effect
tendency of members of a generation to be influenced and bound together by significant events in their formative year
– current cohort is 1970s-1990s babies. might be the most cohesive EVER. Gen Y, Gen Next, Millennial, Echo Boomers and 911 generation.
hispanics and african americans
– largest growing ethnic group in US
– hispanics growing faster
– companies find reaching out to them hard.
asian americans
– fastest growing in USA
– fastest growing income
– very diverse
– concentrated in less areas
native americans
– growing businesses
– 5 million 1.7% of population.
mixed races
– ability to select more than one racial category on census is new
– 9 millions residents in USA identify that way
family life cycle
process of family formation and dissolution
household type
– average house size in 1970 was 5.8
– average size today is 3
– growing number of gays
segmenting by income and expenditure pattern
engels law
engels law
as house hold income increases:
– a small % of expenditures goes for food
– % spend on housing and clothing remain same
– % spent on recreation and educational items increases.
demographic segmentation abroad
– private marketing research firms can supplement gov data
aio statement
items on a lifestyle survey that have similar attitudes, values, and interests.
values attributes and lifestyles
global markets psychographic segmentation
6 segments existing in 35 countries
1. strivers
2. devouts
3. altruists
4. initimates
5. fun seeker
6. creatives
value professional
value duty and tradition
emphasize social issues and societal well being
value family and personal relatinships
fun seekrs
focus on personal enjoyment and pleasure
seek education, tech, and knowledge
80/20 principle (praedos law)
80% of a products revenues come from 20% of its customers
market segmentation process
1. develop a relevant profile for each segment
2. forecast market potential
3. forecast probable market share
4. select specific market segments
undifferentiated marketing
Strategy that focuses on producing a single product and marketing it to all customers; also called mass marketing
Differentiated marketing
Strategy that focuses on producing several products and pricing, promoting, and distributing them with different marketing mixes designed to satisfy smaller segments
concentrated marketing
Focusing marketing efforts on satisfying a single market segment; also called niche marketing
– Targeting potential customers at very narrow, basic levels
– Internet makes micromarketing more effective
– Firms can suffer if market is too small and specialized to be profitable
basic determinants of marketing strategy
– Company resources
– Product homogeneity
– Stage in the product lifestyle
– Competitors’ strategies
Placing a product at a certain point or location within a market in the minds of prospective buyers
possible approaches to positioning
– Attributes
– Price/quality
– Competitors
– Application
– Product user/class

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